The Internal Revenue Service published revisions to tax code items that are adjusted for inflation for the 2007 tax yearIncluded in the revision were deductions for interest paid on qualified education loans and Hope Scholarship and Lifetime Learning Credits.
For taxable years beginning in 2007:
The Hope Scholarship Credit is 100 percent of qualified tuition and expenses, but not more than $1,100 plus half of those expenses in excess of $1,100, but not more than $2,200. The maximum credit allowed is $1,650.
A taxpayer’s modified adjusted gross income (MAGI) of more than $47,000 ($94,000 for a joint return) is used to determine reductions of Hope Scholarship and Lifetime Learning Credits.
The $2,500 maximum deduction for interest paid on qualified education loans begins to phase out for taxpayers with a MAGI of more than $55,000 ($110,000 for joint returns). Taxpayers with a MAGI of $70,000 or more ($140,000 for joint returns) are not eligible for this deduction.
The exclusion regarding income from U.S. savings bonds for taxpayers who pay qualified higher education expenses begins to phase out for MAGIs above $98,400 for joint returns ($65,500 for other returns). The exclusion is completely phased out for MAGIs of $128,400 or more for joint returns ($80,600 for other returns).
Posted 11/29/06 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
